An Atos spokesman said: "For several months now we have been endeavouring to agree an early exit from the Work Capability Assessment contract, which is due to expire in August 2015.

"Despite these ongoing discussions, we will not walk away from a frontline service. Our total focus remains on delivering the services we are contracted to provide in a professional and compassionate way until a new service begins."

Atos began conducting assessments, which are carried out on those claiming benefits due to illness or disability, on behalf of the DWP in 1998. The contract was re-tendered in 2005 and extended in 2010.

The DWP said there had been an “unacceptable reduction in quality” in reports provided by Atos and it was aiming to bring in additional providers.

A spokesman said: "Atos were appointed the sole provider for delivering Work Capability Assessments by the previous government. In July we announced Atos had been instructed to enact a quality improvement plan to remedy the unacceptable reduction in quality identified in the written reports provided to the department.

"We also announced in the summer we will be bringing in additional provision to deliver Work Capability Assessments with the aim of increasing delivery capacity and reducing waiting times. The invitation to tender will set out that the quality of assessments and service delivery is central to how Work Capability Assessments are delivered."

Kate Green, Labour’s shadow minister for disabled people, said the government should sack the firm. “People have been badly let down by Atos which is why Labour has called on the government to sack them with immediate effect,” she said. “But changing the contract isn’t enough. It’s time for the government to fundamentally reform Work Capability Assessments so that disabled people who can work are given support they need to find a job.”